Beginning a week of crucial budget decisions, President Bush and House Speaker Thomas S. Foley (D-Wash.) yesterday traded charges over who will be to blame if Friday brings a second federal government shutdown because of continued fiscal deadlock between the White House and Congress.
The finger-pointing came as lawmakers moved toward a politically charged clash between competing packages of tax increases and benefit program cuts less than a month before Election Day.
One, crafted by House Democrats, reflects the party's goal of spreading the burden of deficit reduction to the wealthy, but includes provisions that would effectively raise income taxes for all Americans. The other, a bipartisan compromise between Senate leaders and administration officials, relies on higher taxes that Democrats argue hit harder at the middle-class than the rich.
Congressional leaders say they hope to have the House and Senate consider each version, harmonize the divergent measures and have Bush sign the final product into law by the end of the week. Even in less contentious years, that process has taken weeks rather than days.
Bush has vowed not to accept another short-term spending measure to keep the government running after current funding runs out at 12:01 a.m. Saturday. "The meter's ticking," he said as he left the White House for a two-day, five-state campaign trip for GOP candidates. "The American people have every right to expect more from their elected representatives. . . than this stopgap government."
But Foley said a government shutdown "would be most unwise if we were proceeding at every possible speed to finish the budget process."
In unusually forceful language, Foley stressed that last week's government closure was not an automatic result of Congress's failure meet its deadlines. "The president chose on his decision to . . . shut down the government," he said. "He bears full responsibility for that."
Foley also complained about Bush's hands-off approach to the prolonged budget impasse. "The president and the administration have been partners in this effort," he said. "They have, by any objective standard, fully as much responsibility for the delays . . . as anyone else."
Indeed, the process of making final tax decisions was delayed last week by confusion over whether Bush was willing to accept higher income tax rates for the wealthiest Americans in exchange for a capital gains tax reduction.
"That managed to get a little confused last week," Bush acknowledged to reporters aboard Air Force One, en route to a fund-raising luncheon in Dallas. "So what I'll do is say the action's in Congress. And I will take a look at what comes out."
Lack of a clear signal of what tax increases Bush would approve virtually guarantees a tumultuous, partisan fight. "It's going to require either a compromise or a confrontation at the end of the week," said House Budget Committee Chairman Leon E. Panetta (D-Calif.).
Nearly half the $175.4 billion in revenue-raising provisions in the five-year House Democratic plan would come from taxes targeting the rich, some of which Bush opposes. They include a 10 percent surtax on taxable income over $1 million and an increase in the income tax rate on the wealthiest Americans from 28 percent to 33 percent.
Yesterday, Bush and Treasury Secretary Nicholas F. Brady criticized another provision as a tax increase for all Americans. The House Democratic plan would raise $36 billion over five years with a one-year delay in the inflation-rate adjustment of income tax rate brackets and the personal exemption.
"That's the part of the House bill that's causing us problems," Bush told reporters on Air Force One.
The 1986 overhaul of the federal tax code linked many parts of the tax system to inflation in order to prevent taxes from rising faster than purchasing power. Without adjustments in rate brackets, for instance, some taxpayers would pay higher tax rates solely due to the effects of inflation.
"Bracket creep is the oldest ruse in the game of trying to hide taxation from the American people," Brady said in an interview last night. "That's what the whole revolution was all about. Why do we want to start that over again?"
In examples provided by the Treasury, a married couple with two children and a taxable income of $34,000 in 1991 would pay $5,100 in federal income tax under the current law. Under the Democratic alternative, the Treasury said, the couple would pay $5,413.50 in federal income tax, an increase of more than 6 percent. A single person with no dependents and $21,000 in taxable income in 1991 would pay $3,150 in federal income tax under current law. Under the Democratic alternative, the individual would pay $3,301.50, an increase of nearly 5 percent.
An analysis by the nonpartisan staff of the congressional Joint Committee on Taxation showed that the House Democratic plan would lower taxes on those making less than $20,000. Taxes for those earning between $20,000 and $200,000 would rise about 1.5 percent. Those earning more than $200,000 a year would be hardest hit, with a 7.4 percent tax increase, the committee found.
Both Bush and Brady were more receptive to the bipartisan package the Senate Finance Committee approved early Saturday morning. "The Senate bill has many more attractive features and more closely tracks what I think the summit agreement called for," Bush said.
The Senate bill would limit the benefit of itemized tax deductions claimed by all taxpayers earning more than $100,000. More than a third of its gross $170.9 billion in five-year revenue increases would come from higher taxes on gasoline, cigarettes, beer, wine and liquor.
The Joint Committee on Taxation said the Senate bill would cut taxes by 2.3 percent for those earning between $10,000 and $20,000 a year while not affecting taxes for those earning less than $10,000. Others would have their taxes raised between 1.9 percent and 3.7 percent, with those earning more than $200,000 hit hardest.
Staff writers Dan Balz, traveling with Bush, and Steven Mufson contributed to this report.